Boxee, ESPN Discuss Cable-Cord Cutting and Online TV

Online video has become much more available to consumers in recent years, but its providers disagree over how much it will complement or cannibalize traditional television.

At the Streaming Media East conference in New York, Damon Phillips, a vice president at ESPN360.com, said he knows what it’s like to lose the battle for the TV remote and often watches games on his PC while his daughter sits in front of “Hannah Montana” on the tube. “It fuels more consumption across all of our platforms,” he said.

But Avner Ronen, CEO of Boxee, which makes software for watching Web video on TV sets, said the increase in streamed TV will naturally lead more consumers to rethink whether they want to also pay $60 to $80 a month for cable. “If online provides to you a better experience, I think some people will choose to cut the cord,” he said.

He estimated that tens of thousands of Boxee’s 500,000 users fall into that category. “I think cutting the cord is a hard decision to make,” he said, but it’s easier for younger consumers, such as recent college graduates who may have never seen a cable bill.

Mr. Phillips said that sports fans will still gravitate to the big-screen TV when it’s an option. Mr. Rosen said the question is whether that person is willing to pay $60 a month for ESPN if that’s the only cable channel he watches. “Maybe cable should offer me a smaller package that’s centered on those” high-demand stations, though he stopped short of using a term that has become charged in media circles.

“The word ‘ala carte’ is a very dangerous word,” he said, to laughs from the audience. “Now when I say it, I know that it’s upsetting to people.”

Doug Ferguson, vice president of product at Sling Media, agreed with Mr. Phillips that Internet TV is complementary — though he did his best zombie impression to say it, to more laughs. Parent company EchoStar plans to sell Sling’s products, which let customers watch recorded TV shows on their computers, to cable operators, he said.

The panel also addressed the question of weak revenue online compared with traditional television advertising. That will change as more premium content comes online, Mr. Phillips said. Michael Rosen, chief revenue officer of Babelgum, a niche-video site, said brands seeking specific audiences will also seek out the proliferating field of video producers.

Mr. Ferguson said early video players were “a little sloppy with how they treated advertising,” subjecting viewers to two minutes of pre-roll ads in exchange for a two-minute clip. Mr. Ronen said it’s a dangerous game for Web providers to play, especially when they’re primarily airing prerecorded content that’s also available ad-free on BitTorrent. “I don’t think there’s going to be parity” in ad rates as a result, he said.

Mr. Ronen also gave an update on what he called “our Hulu situation,” after the TV aggregator pulled its content from Boxee (more than once). Today Boxee users can access Hulu’s RSS feed through a Web browser that is part of the program, which will let them watch any show Hulu makes available there.

“I don’t think they’re happy about it,” he said, adding that its availability could change “any day, any minute. We hope that it will settle down.”

The moderator asked the audience how many have cut their cable in favor of online TV and only a handful of people raised their hands. But many more raised their hands when asked if they were considering it. Are you? What would it take to make you do it?